South Korea’s secondary battery industry is surging back to life in 2026, fueled by a confluence of global events, technological breakthroughs, and strategic investments that promise to reshape both the domestic and international energy landscape. After a period of stagnation caused by the so-called ‘EV chasm’—a temporary lull in electric vehicle demand—new forces are propelling the sector forward, with energy storage systems (ESS), AI-driven power needs, and eco-friendly recycling technologies taking center stage.
According to Money Today on April 13, 2026, the PLUS Solar & ESS ETF delivered an impressive 11.36% return over the past month, with other secondary battery-themed ETFs such as TIGER 2차전지TOP10 (10.73%), KODEX 2차전지핵심소재10 (8.11%), and RISE 2차전지TOP10 (7.44%) also posting strong gains. This marks a sharp turnaround from the disappointing performances that dogged these funds during the electric vehicle market’s slowdown since 2020. Industry analysts attribute this resurgence to the expanding demand for ESS, which is becoming indispensable as nations grapple with energy security and the unpredictability of renewable sources like solar and wind power.
The Middle East war has rattled global energy markets, sending oil prices skyrocketing from $60 to nearly $100 per barrel, as reported by Financial News. This shock has prompted governments to double down on renewable energy infrastructure, with ESS emerging as a crucial buffer against the intermittent nature of green power. “ESS is not only a device to overcome renewable energy intermittency, but also an essential facility for mitigating the load volatility of AI data centers,” said Kang Dong-jin, a researcher at Hyundai Motor Securities, highlighting the dual role of battery storage in both grid stability and the burgeoning AI sector.
Indeed, the rise of AI—particularly physical AI such as humanoid robots and the vast data centers that power machine learning—has led to surging electricity consumption. Big tech firms are seeking to offset this demand with renewable energy, further accelerating the need for robust ESS solutions. The upshot? Companies like Samsung SDI and LG Energy Solution are swiftly converting their electric vehicle battery lines to manufacture ESS batteries, aiming to capitalize on new opportunities in both the energy and technology sectors.
The optimism is palpable among industry insiders. A representative from Hanwha Asset Management told Money Today, “ETF portfolio companies such as Samsung SDI and LG Energy Solution are actively responding to power shortages caused by AI data centers by converting existing EV battery manufacturing lines to ESS battery production, and we expect performance improvements going forward.”
This wave of demand is not limited to storage systems alone. Secondary battery materials, parts, and equipment manufacturers are racing to expand capacity and transition to mass production. As Financial News reported, GI Tech is on track to complete its new ‘GI Tech America’ factory in Crown Point, Indiana, by June 2026. The facility, spanning over 12,000 square meters, will focus on precision parts like slot dies—critical for coating battery cathode and anode materials—and will support major Korean battery makers such as LG Energy Solution, Samsung SDI, and SK On. “We plan to start with slot die repair at the local U.S. factory and eventually produce complete slot dies, as well as other precision parts like notching dies in the future,” a GI Tech spokesperson explained.
Inoch Lithium is also ramping up, having expanded its lithium hydroxide plant at Ochang Technopolis to an annual capacity of 20,000 tons—enough for 400,000 electric vehicles. The company is now supplying lithium hydroxide to both domestic and international battery manufacturers and plans to diversify its product line to include lithium carbonate for ESS and lithium sulfide for next-generation all-solid-state batteries. Top Material, meanwhile, is testing its new cathode material plant in Pyeongtaek, with annual output targeted at 3,000 tons and mass production slated for the second half of 2026.
The recovery in the electric vehicle market is gathering pace, thanks in large part to higher oil prices. According to Financial News, Hyundai’s eco-friendly vehicle sales in March 2026 jumped 23% year-over-year to 23,765 units, while Kia’s electric vehicle sales soared by a staggering 148% to 16,187 units. GI Tech Chairman Lee In-young summed up the prevailing sentiment: “When oil prices rise, demand for electric vehicles, solar, wind, and ESS increases. With the growth in AI data center investments, ESS battery demand will rise further, and if EV sales also pick up, the recovery of the battery materials and equipment sector could happen faster than expected.”
Regional governments are also playing a pivotal role in nurturing the next generation of battery innovators. On April 10, 2026, Gyeongsangbuk-do held a groundbreaking ceremony for a new factory by TCM S, a rising star in secondary battery technology, in Gyeongsan City, as reported by Machine News. Founded in 2020, TCM S specializes in advanced separator technologies—including polyimide (PI) separators—and has garnered accolades such as the Ministry of SMEs and Startups’ ‘Global Small Giant 1000+’ award and the ‘K-Camp Demo Day’ grand prize. The new facility, enabled by the region’s G-star Valley innovation cluster and a combination of public and private investment totaling 24 billion KRW, is expected to help TCM S meet both domestic and international demand while boosting local employment. CEO Shin Tae-yong remarked, “Gyeongsangbuk-do provides a strong foundation for investment support. Through this new factory, we will respond to customer needs and grow into a global materials, parts, and equipment company, contributing to the local economy and job creation.”
Innovation isn’t limited to manufacturing and investment. On April 13, 2026, a team of researchers from Pukyong National University, Chung-Ang University, and led by Professors Ko Min-sung and Chae Soo-jong announced a breakthrough in battery recycling technology, as reported by Yonhap News. Their Simplified Direct Carbon Thermal Reduction (SDCR) process enables the recovery of over 99% of valuable metals—99.5% for cobalt and 98.6% for lithium—from spent lithium batteries, all while slashing greenhouse gas emissions. Unlike conventional recycling methods, which require complex pre-treatment and chemical additives, SDCR leverages the carbon already present in battery electrodes as a reducing agent, enabling resource circulation without external chemicals. “The significance lies in achieving resource circulation using only the internal battery components, without the need for separate reducing agents,” Professor Ko explained. The research, funded by the National Research Foundation of Korea and the Ministry of Trade, Industry and Energy, was published in the March 2026 issue of an international journal on energy and environmental materials.
As South Korea’s secondary battery sector pivots from stagnation to innovation, it’s clear that a combination of global energy shocks, technological advances, and coordinated public-private investment is driving the industry toward a new era of growth. The coming months will reveal just how far these efforts can propel Korea’s battery ecosystem on the world stage.